HOW AN INTERNATIONAL TRUST PROTECTS ASSETS

Can lawsuits have different outcomes depending on where the lawsuit is filed? Could forcing a dispute to a different venue be more beneficial to you? And can a different judge in the same venue with the same facts result in a different outcome?

The answer to all of the above is yes. And it definitely applies to protecting your assets.

Consider if the following might result in a different outcome at your local courthouse.

A single mom filed a lawsuit against her son claiming that he owed her $1,000,000 for raising him. As a struggling dentist herself, she claimed she raised her son alone and paid his way through dental school. Since she was concerned that her son might not provide for her in her old age, at age 20 the son agreed to sign an agreement with mom that he would pay her a percentage of his dental practice profits when he became a dentist to care for her care in old age.

After dental school the fledging dentist son initially paid the agreed upon percentage of his meager profits. But as the profits increased, he refused to continue paying the same agreed upon percentage. The son argued that he had already paid his mother more than enough since he had worked in her dental clinic before opening his own dental office. And besides, he claimed, the agreement was invalid as a deviation from social morals and against public policy.

But the court disagreed.

The court ruled that because the son signed the agreement as a legal adult, he was obligated to satisfy the terms of the agreement. The court ordered him to pay an "upbringing fee" of more than US $754,000, plus interest, totaling US $967,000. The court also noted that civil law allowed individuals to enter into financial support agreements and that, with a ceiling of US $1,700,000 in the agreement on the amount to be paid, the son would not face a struggle to survive.

How do you think that case would play out in your local state or county court? Could an adult son become committed for amounts a parent paid for his upbringing when he was a minor? Or could he become obliged to pay a percentage of his or her professional practice profits after the parent pays for his education?

The case is a real court dispute, and could have happened anywhere in the litigious U.S., or the world for that matter. Although the decision was based on the parties' contractual obligations, adult offspring in some jurisdictions are legally obligated to provide for their elderly parents. This case arose in Taiwan, where it’s implicit in the Confucian tradition of filial piety that children support their aging parents.

But still, there is no question that the law as interpreted by a particular local judge, in any local community, develops in the context of the state and region's culture, religion, and customs. And in the case of an individual judge, the interpretation of facts and laws are seen through the eyes of the biases of the local judge. Whether in litigation rich United States, in the UK, EU, Taiwan, or elsewhere, the same set of facts can and do often turn on different local laws and customs..

The above is important for individuals looking to protect their assets from gold digging plaintiffs. For that reason, the smart ones register an asset protective trust in jurisdictions with superior asset protection laws.

And why do some of those smart individuals create trusts in the Cook Islands, Nevis, or other trust protective jurisdictions? What benefits would yield better outcomes in those venues than at home?

Here are a few laws in the more favorable asset protective jurisdictions outside the U.S. that make some offshore venues superior than what you’ll find locally:

First, there is no rule against perpetuities. This means that the trust can last for an unlimited duration and you can establish a dynasty trust that can last forever.

The trust cannot be declared void, voidable or defective by reason of forced heirship rules of the Settlor’s place of residence.

Foreign judgments – meaning judgments originating in the venue where you reside - are not enforceable against a trust, and it’s generally very difficult to bring a new action against the trust where registered.

The trust and the trust terms are strictly confidential. There is no right of access to trust information without a court order where the trust is registered. This also means that beneficial owners can not be disclosed and are not available to the public.

A trust protector is an important provision in the trust who is responsible for assuring that the original trust provisions are followed. For example, the protector has the power to fire and rehire new trustees, redomicile the trust to a new venue, and to veto actions that the trustees look to take, if necessary. Think of the trust protector as the 'watch-dog' over the trustees. And you can name adult beneficiaries as successor protectors after you pass away.

You can locate and maintain your assets at home or in another country, and they do not need to be located where the trust is registered.

Trusts have been around for the better part of two thousand years under the common law system. International Trusts, designed to protect and preserve family assets, are simply using long established legal techniques to accomplish your particular set of objectives. Choosing the best trust laws to protect your assets is critical to reaching your goals.